Correlation Between Microsoft and Ashford Hospitality

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ashford Hospitality at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and Ashford Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ashford Hospitality Trust, you can compare the effects of market volatilities on Microsoft and Ashford Hospitality and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of Ashford Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ashford Hospitality.

Diversification Opportunities for Microsoft and Ashford Hospitality

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Microsoft and Ashford is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ashford Hospitality Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashford Hospitality Trust and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with Ashford Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashford Hospitality Trust has no effect on the direction of Microsoft i.e., Microsoft and Ashford Hospitality go up and down completely randomly.

Pair Corralation between Microsoft and Ashford Hospitality

Given the investment horizon of 90 days Microsoft is expected to generate 0.8 times more return on investment than Ashford Hospitality. However, Microsoft is 1.25 times less risky than Ashford Hospitality. It trades about 0.28 of its potential returns per unit of risk. Ashford Hospitality Trust is currently generating about 0.02 per unit of risk. If you would invest  22,077  in Microsoft on September 5, 2022 and sell it today you would earn a total of  3,425  from holding Microsoft or generate 15.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Microsoft  vs.  Ashford Hospitality Trust

 Performance (%) 
       Timeline  
Microsoft 
Microsoft Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Microsoft Price Channel

Ashford Hospitality Trust 
Ashford Performance
0 of 100
Over the last 90 days Ashford Hospitality Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ashford Price Channel

Microsoft and Ashford Hospitality Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Microsoft and Ashford Hospitality

The main advantage of trading using opposite Microsoft and Ashford Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ashford Hospitality can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ashford Hospitality will offset losses from the drop in Ashford Hospitality's long position.
Microsoft vs. ACI Worldwide
Microsoft vs. Altair Engineering
Microsoft vs. Box Inc
Microsoft vs. Consensus Cloud Solutions
The idea behind Microsoft and Ashford Hospitality Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Ashford Hospitality vs. Chatham Lodging Trust
Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

Other Complementary Tools

Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
CEO Directory
Screen CEOs from public companies around the world
Go